The leading cryptocurrency bounced back from last week’s high of $24,100. Bitcoin is hovering around $21,000 for now. Industry experts, on the other hand, are cautious about the upcoming price action. However, according to some analysts, rising signs indicate that the price of the asset has found a cyclical bottom.
“Bitcoin tends to outperform in the second half”
Bloomberg senior commodity strategist Mike McGlone shared his latest views on the cryptocurrency market. Stratesist says that Bitcoin (BTC) could indeed outperform in the second half of the year. “Bitcoin is regaining its tendency to outperform in the second half,” McGlone says. The analyst makes the following statement:
Long commodity is loosening. Copper’s fastest drop since 2008 and US bond futures rebound from the hardest drop since the 1987 stock market crash compared to its 50-week average all comes amid an aggressive Federal Reserve tightening. It’s possible that this also conflicts with a crypto at the bottom.
McGlone also adds, “It is possible that the second-half outlook of persistent bull markets in bitcoin and bond futures sees the fact that they are not cooling off any further.”
According to the strategist, Bitcoin has been one of the fastest horses in the race since its inception nearly a decade ago. Therefore, Bitcoin in particular is likely to be transitioning to global collateral, with performance more in line with Treasury bonds or gold. That’s why we think more is ahead,” he explains.
Bitcoin volatility against other assets
In his second tweet, McGlone highlights the low volatility of Bitcoin compared to other assets, highlighting:
Bitcoin’s lowest ever volatility against the Bloomberg Commodity Index (BCOM) could indicate the resumption of the trend for crypto to outperform. Our chart showing the extended upward trajectory of Bitcoin’s price against BCOM is typical compared to most assets.
There is a cautious attitude among experts
cryptocoin.comAs you can follow, there has been a relief rally in the past weeks. However, many see it as a dead cat bounce during a bear market. Because the battered coin seems to have lost its strength while supporting the market for the Fed’s next announcement this week. In line with US tech stocks, Bitcoin’s performance will largely depend on the Fed’s upcoming decision. A 100 basis point rate hike will likely cause a deep sell-off in the crypto market.
After the historic turmoil that wiped out more than 70% of the crypto market cap in months, experts believe the market needs some time to regain investor confidence. Shawn Cruz, chief trading strategist at TD Ameritrade, says Bitcoin’s robust recovery is due to a shift in “risk appetite” as investors re-adopt risk-taking stances. Otherwise, the asset is likely to remain stagnant at the current level.
Crypto analytics platform Glassnode has previously suggested that “true bottom formation may continue” after excessive leverage has been cleared from the system in the past two months. The metric sits at 1.02, according to Bitcoin’s Market Cap to Realized Value (MVRV), which measures periods when the cryptocurrency is over or undervalued relative to its “fair value.” It is also rising rapidly from the 0.8 recorded on 19 June. However, at the previous cyclical low in December 2018, the metric sat at 0.68 at one point. Glassnode adds:
That means more negativity. Or it means that consolidation time is required to form a bottom. However, it could also signal that there is more investor support in this bear cycle.
“Crypto market is at the bottom”
Alex Tapscott, general manager of the Digital Asset Group of Ninepoint Partners, also shared his Bitcoin predictions. Tapscott does not rule out the possibility of a retest of the $19,000 level, contrary to his conservative assessment of the market condition. However, he says the bottom has already arrived. Tapscott comments:
The risk-reward for Bitcoin is heavily skewed upwards. For the long-term investor, this is a rare and exciting entry point.
FTX CEO Sam-Bankman Fried (SBF) said in an earlier interview with renowned macro investor Raoul Paul that the market is pricing in the potential impact of the Fed’s rate hike to 3% this year. As a result, Bankman Fried states that the worst of the accident is long gone.
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